Getting a Grip

While Hawaii may be below the national average in insurance premium costs, rising healthcare costs are still a huge problem. Here’s what some local leaders say could help

October, 2005

While local businesses may feel that health insurance premiums are breaking the bank, Hawaii still fares better than the nation as a whole.

Federal data to be published for the first time in the upcoming seventh edition of HMSA’s Health Trends in Hawaii show that average healthcare premiums in Hawaii are lower than average premiums for the nation. However, that is cold comfort for Hawaii businesses, which have seen double-digit increases in their premiums over the past few years.

Susan Forbes, president and chief executive officer of the Hawaii Health Information Corp., which collects the data for the biannual HMSA publication, says, “I think one message is that it’s not a matter of how much competition there is in the insurance market. The underlying problem is healthcare costs, which are driven by use.”

According to projections by University of Hawaii economics professor Gerard Russo, average family plan premiums are going to go up to about $12,000 in 2006 for the United States and up to $9,600 in Hawaii. Besides, says Russo, family premiums both in Hawaii and the U.S. are growing at a much faster rate than labor productivity. He says premiums on the Mainland have been rising at an average rate of almost 10 percent a year, while labor productivity has grown about 3 percent annually. “That means that over time you won’t be able to afford it,” Russo says.

The business community here has a number of different strategies to address rising health costs. Rick Jackson, president of the Hawaii Asssociation of Health Plans, says, “The only thing we haven’t seriously tried yet, and we’re about to, is apply information technology to healthcare.” In Jackson’s estimation, growing use of electronic medical records by hospitals, physicians and, eventually, he hopes, patients, will lead to better coordinated, higher quality care and more efficient delivery.

Another strategy being rolled out by the Hawaii Business Health Council (HBHC) is for companies to improve their employees’ health status. According to the Deloitte Center for Health Solutions, 62 percent of 365 of the nation’s leading companies that were surveyed recently have implemented wellness programs to improve employee health. HBHC Executive Director Gary Allen says he has spent 2005 raising awareness of employee health-status improvement programs and putting together one that can be tailored for use by local companies. The goal for 2006 is to start getting companies to implement those programs in the Hawaii marketplace. Part of reaching that goal has been educating the heads of the 40 local companies that comprise the HBHC. “If the CEO understands, ‘I have to make an investment in the health of my employees,’ then the chances for success are great, so that’s part of the education that we’re doing in the marketplace,” Allen says.

One member company that was ripe for the picking was Times Supermarket. Since 1997, the company has run an annual health-exam program for its 1,000 Oahu employees. The employee must visit a participating lab for a number of screenings. The results of tests such as lipid profiles are sent to the employee’s doctor and the employee is required to see the doctor after the doctor receives the lab results. Human resources director Clifford Hayashi says Times aimed for and has gotten almost 100 percent compliance each year, because it doesn’t cost an employee anything to go. However, it costs $190 for employees with single coverage and $500 for employees with family coverage in the form of payroll deductions if the employee does not participate. “Honestly, what we do is nag them to death,” says Hayashi.

Hayashi says he proposed the program in 1997, after a five-year study of large claims by employees. He found that claims for $10,000 were 50 percent to 60 percent of his total annual claims. He says, “When I broke it out by disease type, what struck me was that, [with] a lot of them, with early detection, the effects could have been mitigated.”

After seeing some presentations by the HBHC’s Allen, Hayashi and Times are now ready to take it to the next level. At the time of this writing, Hayashi was planning a early 2006 launch of a program modeled on the Asheville Project, a disease stage management program launched in Asheville, North Carolina in the mid-’90s. “It’s wonderful. It’s the most perfect, win-win situation you can think of, because we understand here at Times that the only way we’re going to lower medical costs is by having healthier employees,” says Hayashi.

He adds that since Times became self-insured in 2004, it has no clinical data to support what he believes has been a cost savings for the company. However, in the years before the company became self-insured, its HMSA rates rose at just about 2 percent per year. That’s small when you consider that average family premiums in Hawaii rose as high as 25.5 percent between 1997 and 1998 and rose an average of 6.5 percent between 1996 and 2002.

He says the Asheville Project saved the city money in its first year. The project to help diabetics manage their disease works by first identifying diabetics through employee screening. Pharmacists, who have been specially trained, meet with the diabetic employee each month, analyzing monthly data from the employee’s glucose meter, counseling and generally keeping the employee on track. The pharmacist also sends a monthly report to the employee’s doctor. Employee incentives include free glucose meters and supplies and waiving the co-payment for any diabetes-related medicines. All the employee has to do is sign a form allowing the doctor to release his or her medical records and the pharmacist will call the employee to set up appointments.

Hayashi says the original Asheville Project had 60 participants and cost about $15,000 in glucose supplies (some of which were donated) and training pharmacists for certification. However, the Asheville Project coordinator pointed out that this was not a sizeable investment compared to the $4 million in health-insurance premiums being paid for the participants. Hayashi estimates that Times Supermarket may have about 40 participants and the project may cost about $12,000 to implement. He’s also heard that there is grant money available for the program.

Even if it costs $15,000, Hayashi says the program needs to be looked at as an investment that will eventually reduce the company’s healthcare costs. Hayashi says: “What it boils down to is, how do you affect the employee? That’s really key.”